Central Bank: economic recovery continues

PHILIPSBURG — The economies of Curacao and St. Maarten continue to recover from the corona pandemic, the Central Bank of Curacao and St. Maarten (CBCS) states in its economic Bulletin of September. The first quarter of the year shows that gross domestic product (GDP) growth was driven primarily by stay-over and cruise tourism activities. In St. Maarten, growth slowed from 9.8 percent in 2022 to 3.9 percent this year and will ease further to 2.7 percent in 2024.

Inflation is projected to ease across the monetary union due to an expected decline in oil and non-oil commodity prices. Inflation in St. Maarten was 3.8 percent in 2022. This year it will decline to 3.3 percent and in 2024 inflation is expected to be around 2.5 percent.

St. Maarten’s budget deficit as a percentage of GDP will remain practically equal to 2022 this year and this will not change in 2024. “Government expenditures continue to exceed revenue,” the report states.

CBCS President Richard Doornbosch states that the main risk to the current projections is not finalizing a resolution strategy for Ennia. “This could trigger a run-off of international reserves and cause a deep economic and social crisis.”

The situation at Ennia is not the only risk. Doornbosch also mentions higher interest rates in international financial markets, spill-over effect from the war in Ukraine and the occurrence of extreme weather conditions. ”Additional risks are the outcome of the mutual evaluation assessment by the Caribbean Financial Action Task Force (CFATF) in 2024 and, for St. Maarten, possible delays in reconstruction projects like the airport.”

Doornbosch points out that small and open economies like those of Curacao and St. Maarten are vulnerable to external shocks. “Both countries should diversify their export. Efforts by Curacao to attract more visitors from North and South America are a step in the right direction. To reduce the exposure to commodity price shocks, the countries should invest more in the use of renewable sources of energy.”

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